Shalton and Wheeler lend IFP £75,000 after funding shortfall

Is it just me or does this sound like a two Ronnies sketch... The Institute of Financial Planning announces £75k short fall due to unexpected events...

Blimey - why didn't they ask me. I'd have been glad to earn 7%.

Next time - if there is one - keep me in mind.

Hat's off to Marlene and Jane!

But surely we could have got some more dough off the ever eager Sponsors! They'd be happy with a 7% return!

The IFP is supposed to be a 'professional body'. But aren't we all kidding ourselves. Name one other 'professional body' that has Sponsors!

As to Financial Planning Week - well...

Jeff Prestridge sums it up in his article about Financial Planning Week, he says...

"I think Mr Cann is wrong when he says that people are put off financial planners by cost. The big problem is that most people simply do not have a clue what distinguishes a financial planner from a financial adviser. They do not understand the value of a financial planner and the holistic – non-product based – approach that they bring to the table."

There you have it...

Most people call themselves a Financial Planner (inc many IFP Members inc CFP’s) because they are too embarrassed to call themselves a Financial Adviser – but they don’t do financial planning - their focus is totally on products - or investments!

Fact is, it’s all about products! And the IFP encourages this! Just look at the Sponsors at next weeks IFP Conference! Name one other ‘Professional Body’ that has Sponsors! What would you think of the medical profession if the BMC or the GPC was Sponsored by drugs companies? Do Dentists? Architects? Estate Agents? No!

Until the IFP shakes off ‘Product Provider’ Sponsors it will only do ‘real financial planning’ harm, it will do what SHOULD be a 'profession' no good whatsoever!

Last week I went to the Prestwood Inspired Users Conference - a Conference put on by - and funded by - financial planners for financial planners - with absolutely NO product providers! It was brilliant!

If the IFP banned Sponsors, and charged their members a realistic annual fee for membership they'd have greater freedom, more members, and a lot more credibility! 2,500 members paying £50 per month should cover existing revenues. If Advisers can't afford £50pm then they probably aren't doing Financial Planning and they shouldn't join! And they should stop calling themselves Financial Planners!

Products are important. But they are things you do AFTER you've done Financial Planning.

The IFP has shot itself in the foot with the necessity of the loan...of that there is no doubt, there will be some red faces around Bristol at the moment!

However, Jeff Prestridge's quotation in this article has been placed out of context and I strongly advise everybody to read his full article to get the true picture.

The remarks regarding using sponsors to help with costs at conferences don't hold up either since the IFP has a dedicated fee based membership where clientele pay a pre-defined fee for work carried out irrespective of what their 'product' will pay in commission. The sponsors are there to 'up' their profile with us as advisers in the hope that we will use them...I see nothing wrong with that.

And finally....I am a fee-only planner/adviser, and have been for 3 1/2 years, who has just joined the IFP after 20 years in the industry.

Oh, and my wife owns and runs her own Pharmacy and gets much of her 'street knowledge' about new drugs from the reps who are constantly promoting their companies by telephone and at conferences!

I was considering the IFP, but I'd better check exactly what it is those letters stand for. Planning finances is what I thought it was all about. You know, cashflow modelling. Sensible reserves. No nasty fees for managing money. Don't waste money on unnecessary things.

The saying goes, if you cant do, teach! (not preach!!)

And finally, I am a fee only adviser using whatever is most efficient for my clients o pay my fees. I just don't feel the need to bang my drum about how bloody marvellous I am and then cock it all up in front of everyone.

I understand, rightly or wrongly, that some financial planners take a fee for the holistic planning and then take commission for the execution, as they are different elements of the process. The initial commission, or some of it at least, may be used to off set the fee, but that doesn't apply to the fund-based commission. That is different.

So whatever the title, we're back to fees/commission argument. Personally I'd love to be in a heads I win and tails you lose situation. Is that in RDR somewhere?

Dear Ian and David. There you go! Fee only eh? May be, may be not! I've found that people who claim to be fee only lie about other things as well! Stop it! The IFP is full of it! Most even admit to taking commission to offset fees! (as does Ian). To suggest that " the IFP has a dedicated fee based membership where clientele pay a pre-defined fee for work carried out irrespective of what their 'product' will pay in commission." is ridiculous! Most advisers, at best, are commission offset - not fee based! They use commission to offset fees. A fee is a payment DIRECT from the client.

The trouble is, whilst 'so called' Financial Planners lie about being 'fee based' or 'fee only' thousands of really good, trustworthy, committed to their clients IFA's (the ones who know they need and want to move to a better model) THEY just don't get it!! They don't understand what they should be doing to also be 'fee only' like thise who claim they are - whilst all the time the ones who claim to be 'fee only' are lying! So they bury their heads in the sand.

The good news is, in a few weeks time (2012) this argument will be over once and for all. Then everyone will be fee only - THEN the fun will really start...As clients ask "So WHAT, EXACTLY, is it I'm paying for?' Only then will REAL financial planners come to the fore! Then the focus will need to be on the client, not their blinking money! IFP, Planners everywhere! Take the focus off the money! Off the products! Stop peddling and promoting 'products'! PS. I was going to say "New Model Adviser take the focus off products/investments!" Silly me! That's how they make there millions by advertising them! Hey ho. And so it goes... No wonder we're not trusted!

Don't you just love those smug self righteous types coming out of the woodwork to point their finger at the IFP because they've had to borrow a bit of money to tide them over a sticky patch.

I'll bet none of them has ever had to use an overdraft, buy something on a credit card, or ever taken out a loan. They pay all their debts and bills on time and have never had a red reminder.

Get real.

At a time when we had the Bank of England, the FSA, all the economists working in all the Treasury, the investment banks, the hedge funds, and virtually the entire financial universe bring the entire world to the brink of financial meltdown, you're throwing stones at the IFP because it needed a £75K bridging loan.

Then someone says we should be raising more from the sponsors whilst then saying that as a professional body we shouldn't be touching sponsors with a barge pole - sorry what point are you trying make, do we want their money or don't we?

This arrangement is a loan, whereas raising member fees is something more permanent (oh and it doesn't happen overnight, it could take an entire year to get the money through an increase in fees) as Nick says, it's a cash flow problem not a long term lack of cash.

And all this talk about other professional bodies not having similar problems, well you're not comparing like with like are you?

If Ian now sees this as a reason not to join the IFP he's shooting himself in the foot. Like Ian I am a fee only adviser, and I have found the IFP invaluable in so many ways - not least because of the high calibre of people who also see the IFP as a place to meet similarly minded people. I never walk away from an IFP event, whether the conferences or the regional meetings without taking away something worthwhile.

By the way, last year's IFP conference was by far the best I had attended, so much so that I invited my whole team to join me at this year's conference. Last year's conference was a step change from previous conferences, bigger and better in every way, and unfortunately the economy got in the way. As these things are planned so far in advance perhaps they can be forgiven for not predicting the biggest financial blowout since the Great Depression.

I do however agree with Harry, if the loan needs extending I would be happy with that sort of return.

I would like to meet the individual who is writing this....& I imagine Ian would too. Being called a liar by someone who has no knowledge of our firm, ethics or history and who won't identify himself speaks volumes.

I said 'fee only' & I mean 'fee only'... which as he deduces means a cheque DIRECT from the client into our company bank account in payment for our services. If a product sale results from our services it has NO commission attached unless the client, & I emphasise THE CLIENT, specifically asks for that method of payment to cover the fee, which is a rare event.

He also seems to be worried about the end of 2012.....WHY? We have made the switch to fees successfully and will be Chartered/Certified by then if things go to plan. We are not unique and are nowhere near the level we want to be....as the saying goes 'if we can do it...'

Setting up a true 'fee only' practice takes a lot of balls, for want of a better phrase, and takes time, effort and pain....this individual sounds like he couldn't do it hence the 'chip on shoulder' tone of his postings.

One final point, for the record I do not subscribe to the view that commission should go, only that it should be defined in accordance with a proper fee structure. I believe a whole raft of people are going to lose out and those will inevitably be the poorer members of society which I believe will come back to haunt us in the future.

Do you not see the funny side?? Financial planning!!! The conference was the best ever. Perhaps a little too good.

Focus on the interest rate being paid if you like but the issue that is drawing all the atention is that experts in financial planning hadn't planned very well.

Perhaps the high interest that is being paid is because when the interest rates available outside were researched, the lenders also focused on what is absolutely the funny side. How much interest would you charge to financial planners who had run out of money. It is funny, and if you don't see it I think you might be in the minority

Final point about being fee based. Perhaps I should have said I work under what I call customer agreed remuneration. I advise clients on the most efficient way to pay and I'm afraid in some cases, this might be commission offset. The point is that clients should know what they are paying. If you think that only cheques count, you should reflect a moment and realise that accountants and lawyers take their fees from rebates and assets from time to time also.

During these challenging economic times I would imagine not many businesses, Planners or Advisers have been totally immune.

I guess most businesses would have had to review their strategy, including finance. The IFP is no exception to this, so I cannot understand what all the negative vibes are REALLY about?

except to say, even with the best made plans, these things happen. Judging by the size of the payroll spend alone a £75k shortfall can occur very easily, especially when markets and funding have changed so rapidly. The alternative would be for an organisation to hold more funds in reserve, but then there would be counter accusations of why is it sitting on a pile of money.

So really I suppose I do have an opinion. i.e. This is a non story and for the record I am not an IFP member and probably never will be as I don't see the need with my customer base so my defence of the issue is an outsiders opinion.

The reverse is however the case with the FSAs overdraft and loan due to their budgetary shortfall as that should have been forseen IMHO and bonuses should have only bene paid to junior staff, anyone managing a team should have had their bonuses blocked..

David, what makes you think I'm a 'he'?

My point was simple: Why should the IFP have 'Product Provider' Sponsors? Products are NOT financial planning. They are things you do AFTER you've done financial planning. Just tools in the bag.

This is a BIG problem. But 'Product Providers' and 'Periodicals inc NMA' focus purely on the 'products' because that's how they make their money - by selling or advertising them.

Advisers (i.e. so called 'new model' financial planners) then get carried away by the 'product', dream about 'products' focus on 'products' talk about 'products' - amongst themselves and worse, it's their focus with their clients! But that is NOT financial planning.

That's why the public cannot differentiate between 'Financial Planners' and 'Financial Advisers' - that was my point. Der!

So in the same way the IFP does not differentiate itself from the PFS - sponsored by Product Providers.

My point was, as a 'professional body' surely the IFP should be self supporting from the subscriptions of it's members! If that means subs need to go up, then so be it! I for one would be happy to pay more to then be able read a FP publication which then has little or NO focus on product - and be able to go to a Conference with NO BLOODY PRODUCT PROVIDERS - just financial planners talking financial planning. (But then for many, if they can't talk about products, then what can they talk about?)

This years IFP conference will have, say 400 folk attending. just a guess but you can bet around a third will be from Sponsors/product providers!

Whether you're male or female I wish you would have the balls to identify yourself.

You make some very generilst assumptions about the behaviour of financial planners and new model advisers. Do you think it's only you who can differentiate between financial planning and product led sales? You write as if you do.

Of course financial planning comes before the product recommendation, if indeed one is made at all. All the IFP members and NMAs that I speak to understand that. How does exposure to product providers change that? Are we all so weak minded that a presentation from a product provider will send us all lemming lke out of the door to flog their products? Give us some credit please.

Let me be up front about this and declare an interest; I am the chair for the London region of the IFP. It's one of my roles to put together a maningful programme for the members in my region.

I don't use product provders all the time, rarely in fact, but when I do I give them a brief that they cannot talk about products at all in their presentation. In fact if they did the membership would switch off and tune out, that's if they actually turned up. They're intelligent people, they know when they are being sold to and they don't lke it.

Instead the providers are seeing that it makes sense to provide knowledge, whether technical or marketin or otherwise. Over time they build relationships that are deeper than prduct pushes and that is where business is done, after the financial planning process. The dynamics are changing and the providers no longer swagger in to meetings and pitch their latest wares.

But with circa 3,000 members there is no realistic option of charging the membership the full costs. For many the increase in price would be unaffordable and they would leave, thus for the remainder the costs would increase even further.

Frankly I would rather not have to have cosy meetings in the back rooms of pubs with the few remaining members discussing monte carlo modelling, it sounds like a mensa meeting, and I've done e few f those to know I don't like them.

At this stage of it's development the IFP needs the support of its sponsors, and provided proper guidelines are established there's no real problem about that. Even the PFS with it's 25,000 or so members and the support of the CII behind cannot make ends meet without a bit of sponsorship.

Honestly Honest I think you're missing the point.

Honest

I am a CFP and a Financial Planner and damn proud of it! I provide a service to my clients that results in the implementation of an investment or product ONLY if that is the correct solution. I am not lead by a provider or induced by allocation rates/high commissions and probably wouldn't recognise one anyway as I've always worked this way. Don't tar us all with the same brush. To echo some of the other replies to your comments - if you're so holier that thou, why aren't you happy to declare who you are so we can all learn from your expertise??!

I had to smile though at your glowing comments about the Prestwood conference "designed for financial planners by financial planners". Hello? Is the answer not in the title? Last time I looked Prestwood WAS a provider of a product - albeit a very good one! Wise up! I am in no doubt that the reason why Paul Armson hosts these events is to increase the number of Truth users rather than the general benefit of the Financial Planning profession.

I spend hours of my own time getting involved in IFP matters in order to improve the profession of Financial Planning. If you're so keen to make a difference why don't you do something positive instead rather than posting unfounded comments on this site?

Wow! There is an infamous blogger in another world I follow with interest called Anonymous Coward. Looks like he might have a clone. Your points have no validity unless you put your name to them.

Have the courage of your convictions, what are you a (wo)man or a mouse.........

Whether you are a Planner or anAdviser

the vast majority of us I believe no longer "sell product" we look for solutions for a client to a dilema or an opportunity. Sometimes a "product" is needed for that solution, especially if it is to build up savings for long term needs (i.e. using pensions, ISAs or simply cash accounts) or it may be helping someone understand what a mortgage is and why often renting will better suit their current circumstances.

I desrbe myself as an INDEPENDANT (note the word, it's very important) Financial Adviser, not a planner for two reasons. 1. I have basic financial qualifitactions, but having been in branch banking prior to advising and also spent 16 years 8 of which as a seniot NCO in the TA, I have a few other skills which are useful with the client market I deal in. I am not a certified planner, therefore I do not describe myself as a planner and am unlilely to aspire to something I find inappropriate to my client's needs. Secondly up until about 6 years ago, the vast majority of people I dealt with, the ONLY plan was to put and keep a roof over their head and for many this requried continual change so it was not a plan it was advice about the changes required when a need arose or post problem. Hence to describe oneslef as a planner then would be innaccruate as whilst prior preperation and planning does prevent P**s poor performance, the advice and identifying the outcomes required and actions on can often be the most important part!

And to "honest" as Dennis Hall said "Are we all so weak minded that a presentation from a product provider will send us all lemming like out of the door to flog their products? Give us some credit please.............

Well 'Mr. Honest', it appears you are building yourself a credibility issue,

probably not a good idea to identify yourself now...!

I too have been to Prestwood conferences in years gone by and agree with Keri above. The product is good but are you really that naive to believe they are not designed to promote Truth & the Prestwood System?

Sponsorship of the annual IFP conference, and indeed monthly meetings, for me is a non-issue because I have met enough members, and non-members for that matter, to know that what 'Mr. Honest' alludes to is nonsense. It's bound to go on to a degree but his tarring of everybody with the same brush in such a general way is pretty shameful.

If you are a member of the IFP 'Mr Honest' it might be a good idea to leave since you appear to have nothing good to add to the picture.....if you are not a member then join and start asking people how they've done what you clearly don't think can be done.

P.S. I would also like to chip in at 7%!!!

Some of the comments on the blog are opposed to sponsors of any kind,

I for one are not. Let’s face it; sponsorship is now a part of every day life whether it is sports, the arts or commercial sponsorship such as the IFP.

It is the way that commercial companies promote and market their brands. This is a commercial reality. In most cases, without sponsorship (in this case the IFP) may not survive.

What I do question, what message did the decision to use directors loan's send out to the IFP sponsors?

Today, we live in a hard commercial world where costs are being cut in an effort to save jobs. Sponsorships, like many other resources in a company will be directed where they perceive most value.

I would like to ask the board;

Why the need for such an extravagant conference, that only a small percentage of members attend? In 1994 when I joined the IFP and attended my first conference held at Oxford, the speakers were mainly financial planners who like me were getting to grips with this new concept of financial planning. The conference was arranged and managed on a shoestring and with the help of sponsors, was a great success.

Why does the organising committee see the need to hire celebrity speakers and use such expensive hotel venues? I am assured the celebrities do not work for free and require a fee for attending, in some case many thousands of pounds. What value can these speakers add? I feel very little. There are many IFP members that could give an impressive and motivational speech.

Nick Cann, was quoted saying that they (the IFP) were not looking to raise fees. Again, I have to ask the question why not? While I agree no-one likes to see fees increased. Is this the main reason why the board are reluctant to take these decisions,or do they fear that some of the members may question the value of IFP membership?

May be, the board should review the whole strategy of the IFP so that all members can have a greater say.

Below are a number of suggestions:

1. More Resources should be targeted to branch and regional level, rather than a national conference where it appears very few of the members attend.

2. Dispense with the current self selection of board election and have an electoral system where board representation is voted on by branch and region.

3. Minutes of board meeting should be published so that members through their regional board representatives are then able to express opinions and can have valuable input

4. Any member of the IFP should be allowed to put themselves forward to the board; this should not be restricted to CFP licences only.

The IFP is for all members not just a chosen few.